New apps geared toward young Latinos
NEW YORK — Carlos Garcia was three years into his first job in technology at Merrill Lynch when he first learned what a 401(k) retirement savings account was. He was floored when he learned that a colleague had already saved $30,000 in three years, and the company had matched it.
The concept of making money off money was foreign to Garcia, an MIT graduate who was born in Texas to immigrants from Mexico. His story is not uncommon among U.S. Hispanics, who lag behind other demographic groups when it comes to saving for retirement. But for Garcia, the episode became the inspiration many years later for Finhabits, a bilingual digital platform designed to make savings and investment accessible for Latinos.
Finhabits launched last year into a crowded world of robo-advisers, savings apps, online lending platforms and other financial technology companies.
But it is one of the few aimed at demystifying stocks and bonds for Hispanics, particularly young professionals who have the means to start investing but may have inherited a fuzzy understanding of the financial system from their immigrant parents.
“Hispanics are very hard workers and we are able to generate quick income for our families. Sometimes we are good at savings but we put the money under the mattress,” said Garcia, who previously founded two other companies, including an internet analytics service for hedge funds.
Other financial-tech startups aimed at Latinos have focused on immediate financial needs: paying off debt, building credit and gaining access to loans. Few besides Finhabits are dedicated to encouraging investing and long-term financial planning.
Another is Mi Dinero Mi Futuro, a personal financial planning platform started by Ramona Ortega, a former New York corporate attorney who became preoccupied with the lack of financial literacy among Latinos while working in bankruptcy and securities litigation.
“No one talked to me about money,” said Ortega, the daughter of Napa Valley farm worker and the first in her family to go to college. “The fact is that our communities have not had a legacy of talking about money.”
Finhabits follows in the footsteps of robo-advisers Betterment, Wealthfront and Acorn, which use computer algorithms instead of a traditional wealth adviser to manage customer funds across various types of investments. Ortega’s platform is similar to more well-known personal finance apps Mint and Credit Karma; it offers personalized budgeting tools and recommendations for affiliated financial products.
Crucial to the Latino community, Finhabits lets users open an account with an Individual Taxpayer Identification Number, a processing number issued by the Internal Revenue Service for people who are required to pay taxes but do not have Social Security numbers. That makes the service accessible to immigrants who are not legal residents but still pay federal taxes.
Garcia said Finhabits has about 10,000 active clients who invest an average of $40 a week.